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Capital Markets

Japanese corporate bond sales quicken on rate outlook

Toyota group affiliates join the list of companies planning to issue debt

Long-term interest rates are expected to increase in Japan.

TOKYO -- Anticipating higher interest rates, Japanese companies are stepping up bond issuance to secure long-term funds before borrowing costs rise.

Autoparts maker Toyoda Gosei is expected to issue seven-year debt worth nearly 10 billion yen ($92.8 million) to invest in new equipment for well-selling airbags and other products.

Aisan Industry, another Toyota-affiliated parts maker, plans to sell 10 billion yen in five-year debt to purchase new equipment for motorcycle parts. Toyota Motor affiliate Jtekt is also considering a bond float.

Tokyu Fudosan Holdings, which is redeveloping the area around Tokyo's Shibuya Station, plans to issue 10 billion yen in ultra-long 20-year debt.

Nippon Steel & Sumitomo Metal group distributor Nippon Steel & Sumikin Bussan aims to sell 20 billion yen to 30 billion yen worth of five- and 10-year bonds as early as February. The money will be used to expand overseas operations.

Corporate Japan's appetite for capital is strong given healthy earnings. Long-term interest rates remain low in Japan -- the benchmark 10-year government bond yield edged down to 0.055% Wednesday -- but upward pressure is mounting on rates in the U.S. and other economies. This raises the prospect of higher borrowing costs in the domestic bond market.

"More companies are considering a last-dash issuance of bonds," said one domestic analyst.

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